CarMax 2Q17 Earnings Call Notes

“Lastly, we have previously mentioned that we conducted a small test of home delivery. This allows the customers to shop for and buy a car at their convenience without coming into the store. We are now conducting another larger test in Charlotte, North Carolina. Through this test we hope to learn the best ways to further operationalize this offering and deliver our hallmark exceptional customer service experience outside the store. We believe no one is in a better position to deliver as much of the car buying experience online as the customer wants. ”

Haven’t seen a big increase in supply of late model cars yet

“Yes, I think on the supply side I think the expectations were that was going to be coming back more in full force at this point and continue on later into next year and in the year after. We really haven’t seen a big, huge increase in the supply of late model cars. I think there is some coming out there but we haven’t seen the big increase that I think was originally expected and we think it will come, our external partners in the auctions think they will come later this year into next year and even the year after.”

Not surprising to see credit migrating the other way a bit

“we have been in an environment of very favorable, not just we but the overall credit markets in general, have been in a very favorable loss environment for the last few years, the last couple of years at least. And it’s not hugely surprising to see things starting to migrate a little bit differently.”

Auto lending tends to be more regional rather than national

“I think, as you pointed out, we are always looking at testing other lenders, we have got a test running right now but it’s not big enough to talk about. The interesting thing about this space is there is very few national players, it’s like much more a regional space in the financing world. So we can test additional lenders.”

Have seen a reduction in applications from customers below 600 FICO

“what we have observed in the stores is a reduction in those applications, call it the below $600 FICO level and continued increases in the volume of applications on the high end. Now I can’t speak to what other people are experiencing but we have seen some communications from other retailers that this particular segment of customers is a bit challenged today. ”